Question

Splish Realty Corporation purchased a tract of unimproved land for $154,000. This land was improved and subdivided into building lots at an additional cost of $96,488. These building lots were all of the same size but owing to differences in location were offered for sale at different prices as follows. Group No. of Lots Price per Lot $8,400 11,200 6,720 Operating expenses for the year allocated to this project total $50,960. Lots unsold at the year-end were as follows. Group 1 Group 2 Group 3 5 lots 7 lots 2 lots At the end of the fiscal year Splish Realty Corporation instructs you to arrive at the net income realized on this operation to date. (Round ratios for computational purposes to 4 decimal places, e.g. 78.7234% and final answer to o decimal places, e.g. 5,845.) Net incomes

Answer 1

Solution -

Calculation of gross profit Group No. of lots (A) Sales price per lot (B) Total sales price (A*B) (In $) Relative sales price as % Cost total(In $) Cost allocated to lots (In $) Cost per lot (In $) 5,880 7,840 4,704 8400 75,600 1,68,000 1,14,240 3,57,840 1 21% 52,920 1,17,600 79.968 250488 11200 47% 2 15 250488 6720 17 32% 250488 100% 2,50,488 Lots Sold Statement Total Selling price (In $) 33,600 89,600 1,00,800 2,24,000 Group No. of lots Cost per lot (In $) Extended cost (In $) Gross Profit (In$) 5,880 7,840 4,704 Price per lot (In $ 8,400 11,200 10,080 26,880 30,240 67,200 1 23,520 62,720 2 8 3 15 6,720 70,560 1,56,800 Calculation of Net income- Particulars Sales Cost of goods sold Gross Profit Operating expense Net Income Amount ($) 2,24,000 1,56,800 67,200 50,960 16,240